2019 Flashcards
benefits of being entrepreneur
•own boss- make all decisions, control over working life, (choose opening hours, employees, clients)
•can make money (employee limited to salary)
•following your dreams-can create dream job
•personal fulfillment- sense of achievement
steps in planning
•SWOT analysis- identify strengths, weaknesses, opportunities and threats
•set objectives- use swot results to set objectives. eg aer lingus did swot-price too high- objective to become low-cost airline
•devise strategies- plans of action that set out how to achieve objectives
organizing
•arranging all resources (human-employees, physical-equipment, financial-money ) in most suitable form to achieve aims
controlling
•staying in target, taking corrective action
steps
1. set goals- eg 10% increase in sales in next year
2. measure performance regularly- eg 1 month in sales have fallen
3. measure deviations & investigate- eg looks at fall and why sales fell
4. take corrective action- eg more advertising & price reduction
reasons for industrial disputes
•pay & conditions- post, overtime rates, holidays, hygiene & safety, heating
•dismissal or suspension of fellow worker
•employer refusing to recognize union- eg ryan air pilots
importance of business being environmentally friendly
•increased sales-growing demand for green products, sets apart usp, eg Boeing 20%les fuel
•lower costs-less waste (3rs), les in landfill
¥better image- good pr, increased customer loyalty eg.Body Shop
•compliance with laws-gives passing more green laws, going green allowed business to day ahead of curve
inflation impact
•high inflation is bad for business
•employees-higher wages (cost of living claims), business costs increase/lower profits/possible strikes, so bad ir
•products more expensive-consumers but less, falling sales, etc
•cost if all purchases for business increases- stock, energy, falling profits
interest rates
•cost of borrowing
•determined by ecb
•repayments on business loans will increase, increased costs & lower profit, company may not afford workforce so redundancies
cost of borrowing
(interest rates)
•lower interest rate cheaper to borrow as repayment low& consumers will borrow. high rates discourage business expanding. consumers with mortgages will have less disposable income of rate go up, lowering demand and sales fall
unemployment impacts
•unemployed-less money to spend, less demand, falling sales
•more people looking for fewer jobs-easier for business to find employees, can offer lower wages which reduced cost (min wage tho)
•govt- more social welfare payments, increase taxes, business less profit, more expensive to hire
•emigration- eg brain drain in 80/
benefits of enterprise in business
•innovation-improved/new/services, increasing sales/profits/business survival
•efficiencies-reducing costs through more efficient ways of producing. making more competitive
•creativity-employees can create without being punished, etc, morale
benefits of enterprise in community
•employment
•community engagement-local people involved, enriching lives
•wealth creation-for individuals & community
•quality of life- eg tidy towns
importance of good communication
•improves ir- listening to grievances & taking them out
•increased productivity-clear simple instructions ensuring workers know what’s expected
•better decision making- reg management meetings, bring skills/expertise
•upward communication encouragement- employee suggestions ,pos contributions to business
barriers of communication
•language-jargon/technical-use simple
•info overload-large volume info eg. emailing too much, use short snappy emails
•prejudice-if receiver doesn’t like sender
•timing-if message too late eg out of hours emails
•poor listening skills-distracted
•trust-skeptical if senders intentions
maslows hierarchy of needs
•physiological-basic needs water, food
•safety- safe&secure, fincancial
•social- friendship, acceptance
•self esteem- self respect, feel valued, respected by others
•self actualisation-personal growth, reaching potential
autocratic leading
manager makes all decisions, constant supervision, doesn’t take advice, no delegating authority so employees do what they’re told
democratic leading
manager involves ebonies in decisions, encourages, delegates, takes their views into account, reasons with employees, explains
laissez faire leading
manager very little involvement in decisions, set goals and timeframes but leaves employees to achieve results
factors that influence leadership style
•if you have capable trustworthy creative employees then laissez faire
•if employees are new, inexperienced, maybe autocratic do they know what they need to do
•communication channels- leaders who keep open lines of communication s& encourage feedback often adapt democratic, making inclusive environment
liquidity
ability to pay immediate debts
how solve liquidity
•selling slow moving stock
•improve stock control
•improve credit control
•increase prices
•use cash for forecasts to avoid liquidity problems
•sell investments to improve any neg trend/illiquidity
acid test/quick ratio
current assets - closing stock/current liabilities
•if ratio falls below 1:1, business is illiquid
•if business total assets <total liabilities then its insolvent
liquidation
assets are sold off and company is closed down
short term sources of finance
•bank overdraft
•accrued expenses
•credit card
•trade credit
•factoring
bank overdraft
limit even if have insufficient funds, report with interest
•advs- interest on amount overdrawn, no security, interest tax deductible
•disadvs- expensive, 30 days free of o/d, back can ask for repayment, extra charges if go over limit
eg- shop selling toys may get bank o/d in september to purchase stock for christmas season. owner expects stock will be sold by december and o/d can be repayed
accrued expenses
•utilities send out deadline for payment, business uses money for utility to finance but will receive money back in time to pay
•advs- no interest, no security
•disadv- cut off, only survie to finance certain utilities
eg- a company might receive goods or services and pay for them at later date
credit card
•pay using cc, repaid in full at end of month
•advs- safe
•disadvs- high interest rate, govt tax on cc
factors determining price
•cost- making & selling. breakeven
•competitors price- better/same/worse quality then what price eg. Pepsi and Coke
•consumers- what target market can afford eg. BT jeans vs Penneys
•legal regulations- excise duties/vat, govt power to set min/max pricing eg. min unit pricing for alcohol 2022
strategic alliances benefits
•cost effective expansion- split costs, sharing of expertise & skills
•more successful expansion- brainstorm ideas, best possible ideas
•new markets- gaining loyalty of customers of other company’s customers
strategic alliances disadvs
•disagreements- smaller business can feel obscured by bigger company
•corporate secrets may be lost
performance appraisal
•setting objectives and tone frame then meet and review. good for morale & communication.
•spot workers underperforming, identify those to be promoted, motivated, improved communications (reg meetings)
public relations
•efforts of business to create s& maintain pos image by favorable publicity
•attract publicity- eg. or stunt red bull and free fall skydiver
•target certain customers- eg, sponsor events
•building image that reflects well
•counter bad publicity eg. dominos
pr techniques
•sponsorship- financially supporting team/event
•public service activities- eg. tesco charities
•influencer- through tiktok
•news conference & press releases
•events- eg christian louboutin exclusive invitation only events, doesn’t advertise
